RMA, thanks for a short and pivotal answer to Charlemagne’s “pointing to his own self-opinionated imaginations” or to mere blueprints drafted by third parties without Germany’s consent, but pretending here as if Germany didn’t keep its promises. It is exactly this highly manipulative and dishonest method I was criticizing earlier.

Two dozen moons ago I wrote what I believe is of importance to repeat now.

In 1992, a group of concerted speculators took advantage of Britain's excess government expenditure to launch an attack on the pound.

Speculators were highly successful: in less than three days they made billions, sterling had to leave the then wriggling monetary arrangement.

Two lessons should have been learnt: profligacy always opens flanks to currency predators; speculators only triumph, making money, if their attack is swift, is over in couple of days and proportional to the size of the prey.

Fast forward to 2010.

Eurozone countries, some worse than others, opened the Euro flank with their silly profligacy; the speculating attack couldn't have been more inept: it was insufficiently funded; when the initial attack failed, speculators didn't realize their main weapon, surprise, was lost and repeated the novice investor mistake of keeping betting on a losing streak.

They lost wads of money that resulted in the tool they had created for the purpose going bankrupt in no time: (MF Global run by no other than previous Goldman Sachs man-in-charge); Soros the Wunderkind of speculating investment having had to reduce his hedge fund to a family one not to have to disclose his loss of power; and one of the Paulsons to lose his good scent reputation and on and on.

It seems I am pitying the forces everybody protests against; I'm not.

Money is the coldest beast around: it is totally allergic to emotions.

Ever since Nixon did away with last link between material goods and money, money is just paper or, if you have a modern mind, electronic impulses in a network.

It is just worth what people think it is.

The result is that the "artificial" money lost by speculators created a void in capital and financial markets that could have helped the world to gradually start overcoming the universal debt crisis.

As usual, when money is scarce in a family every member complains against others and none is right.

This absolutely ridiculous Euro war is the best example around; Euro supporters (of which I have always been a moderate one, thinking the the idea was good but introduced a little too early and too hastily) are unhappy with the mostly artificial crisis.

Euro supporters who are against debt mutualization (my case again) are disappointed because apparently it looks as if sharing debt is inevitable (is it?).

Euro attackers who, if The Economist's four repeated samples of a few thousand readers are only around one third of mostly non Eurozone citizens) are unhappy because after three years of efforts the Euro gets institutionally stronger with each attack.

Unhappy people make for unhappy economies and we are heading for the final stages of the 30's repetition.

I don't think that at this moment of wars in Syria, after the idiotic tragedies in Libya and Iraq, possible upheaval and separation in Spain, beginning of unrest in Saudi Arabia not to mention Iran, Japan/China and so on plus the hidden but serious financial situation of countries thought to be prosperous, there's much we can do.

But I repeat my plea of two years ago to the loudspeakers of large financial interests, mostly those who blow the City's horn.

Stop or seriously slow down the hysteria about the Euro; ever since March 2011 when the British treasury (and later the American one) realized how bad its demise could be for their national interests, it's probable the Euro will have the usual real life span of any currency: one or two generations (maintaining the name doesn't mean the currency is the same: both the dollar and the pound are not the same currencies as in 1975).

So hysterical, gentlemanly or subtler Euro attackers have two unpleasant alternatives ahead.

If the Euro survives,the most probable outcome, they will look as foolish as Mr Soros or Mr Corzine of ex Goldman and MF fame.

A brilliant journalist who preceded the present editor in chief of this magazine, had to change occupation after having defended with all legitimacy (but my disagreement) a very unpopular cause in the UK.

If the Euro survives a similar development is not unthinkable.

If, less likely, the Euro goes down, nobody will forgive the attackers (even the subtle ones) who will be considered responsible for the mess that will come.

One of the often unnoticed important techniques of a speculating attack is to buy a currency "long" (6 months was the favourite term for both the 1992 pound and Euro attacks) and sell them "short" (next day when they were high, again in 1992 and 2010).

In between you launch a "drive down" campaign in the media and through rating agencies so innocent and naive players (some of huge standing) make the market follow the wishes of speculators.

There are obviously other techniques and I haven't studied the details of Corzine's operations.

Besides I'm not an expert: just like the Devil who knows a lot, not because he is the Devil but because he is very old, I'm very old too.

As in 2002 when everybody was busy buying CDO's applied simple maths showed it'd blow up in ten years time.

I was wrong. It took 5 years.

One of the successful techniques of super duper speculation is to make by-standers or innocent buyers believe it is the opposite of speculation.

Occasionally it succeeds, occasionally it fails. Even more occasionally perpetrators end up in jail after considerable damage done to all of us.

Ever bothered to see who the main shareholders of the rating agencies are? Go read their proxy statements and SEC disclosures and check. A lot of hard work but surprises are galore.

Information is public but unearthing it is boring.

Yet, as I say, I'm not a bond analyst expert: you could be right, I wrong.

Just in case, I keep looking at woods, not trees except when they characterize the forest. I've no reason to repent.

You are right now. There was a time it varied from Corrazine to other fancier spellings.

But why be surprised when after I (and a whole lot of Germans) chided The Economist and a few posters that it was Duisburg not Duisberg when a tragic accident happened there a few American posters protested against our nitpicking?

One of them even had the cheek to repeat Duisberg a dozen times to make sure he was right, not me.

In reply, I even wrote Churchborough instead of Churchill and Marlhill cigarettes instead of Marlborough but as Josh would remark, it was far too subtle for such an idiot.

to la.výritý on "just read that Portugal government complied to the mobs request for cancelling some austerity decisions"

Knowing the place more than well (two sons and three grandchildren live there) I busied myself to learn the facts.

It's simultaneously both unimportant (there are far more serious things under the surface) and far more complicated than meets the eye.

Unimportant: politics as usual. The main government party backed down on a new way to collect Social Security taxes.

It was opposed by the junior coalition party (to the right of the senior party) the trade unions, the left, the employers federation, all big company CEO's, seemingly by the president of the republic, the right, the centre, my youngest son's two dogs and the sparrows on the tree in front of parliament.

Obviously, when a huge demonstration took place a few days ago, it was one of the main slogans being chanted.

The measure was quickly replaced by others apparently more austere but I wouldn't know. Not well informed on the subject, but it seems to be the general opinion.

As far as it is generally accepted by all concerned, the backing down will not affect the brilliant Portuguese efforts to recover, apparently even on the contrary.

Now, why more complicated.

Attention, this is my interpretation based on some hard facts and a lot of informed speculation of my own.

I could well be wrong.

Among the partisans of the need for austerity (still, the huge majority despite the violent hardships) there are three schools of thought: the responsible opposition (that's their job to have different ideas) and two main groups within the senior coalition party.

Forget the responsible opposition. They are doing their job but they are not against the need for austerity.

The two schools within the senior government party seem to be at odds.

If it were just a matter of opinion, that would be to the good; the more the lines of thought within general basic principles the greater chances of getting things right, despite Charlemagne's ideas and practice to the contrary.

The problem is that it appears that they represent two inimical groups of foreign financial interests.

For many years the present president of the republic cultivated the image of the austere, honest man "sans peur and sans reproche".

Facts cropping just before his re-election are leaving doubts about this.

I'm not making accusations for which I would have neither the competence nor the right. I'm just stating an ill defining feeling spreading in public opinion.

Maybe he and his group of supporters inside the majority party represent interests that are opposed to the group that supports the prime minister.

Again, no accusations but it looks as if one of the government supporters and close aid to the prime minister represents the interests of an opposed financial group.

I may be, and hope to be, very wrong but the whole thing doesn't smell too good.

That's the possible importance of the matter.

The Portuguese, being certainly one of the oldest, if not the oldest nation in the world, are wise, patient and contrary to not well informed popular opinion, terribly disciplined.

Like the Danes, possibly even older as a nation than them, when they feel they are being duped they lose patience and throw everything up in the air.

That's what worries me. I sense there may be some of this bubbling underneath the comical demonstrations in which young ladies kiss policemen and huge crowds behave more politely than at respected restaurants.

If my fears are right, let's pray they are not, we outside Portugal could be in for a nasty surprise.

For some peculiar reason I've never been able to discern, historically Portugal always anticipates big European trouble.

The two best known incidents are the bourgeois revolution in 1835 that really started in Portugal in 1383 or the bloody "nationalist" revolution that spread all over Europe in 1848 and had its first symptom in Portugal in 1846 (against a land registry of all things!!). A few not so so conspicuous other incidents occurred in between and after.

So beware: either pray I'm wrong or Portuguese decide not to create trouble. I could be a dangerous omen for Europe and the world.

At least some of the bad films on the Mafia were good for a few laughs. "Prizzi's Honor" was a silly film - but how can one not enjoy Jack Nicholson and Anjelica Huston?

(sigh!)
No, tudo is not bem. I am fighting to find money to put petrol in the car to continue meeting my work obligations - and in the meantime I am owed close €10,000 for work delivered and invoiced in most cases months ago.

I have a friend with his own company offering IT and printing services for local companies - he owes 80,000 to the tax authorities and is owed in turn 100,000 - with little hope of being paid soon. Every time I complain publicly - at the coffee bar for example - about the money I am owed, I am told, "What? Ten thousand? You are lucky! I am owed..... (fill in the amount) .

This is getting ridiculous - and a friend has invited me to move to Perù with him (many members of my family have lived there, from 1850 to 1960) so the idea is attractive. Seems like a family tradition...

Like so much of southern Europe, Italy and Italian companies will survive - because we are earning money abroad. FIAT docet - as they earn all their profits in North and South America these days. Looks like I need to brush up my Spanish...

BTW, the mountainous part of Friuli - which borders Austria directly - is called "Carnia". (The prefix "car-" in Latin meant "stone" and appears in our local place names everywhere, Carinthia in Austria (Karnten) the Carso rock region, "Carniola" was the medieval name for Slovenia, etc.

The saying "I don't believe in witches..." (Non ci credo alle streghe, però...) is well known. Here is a book on the subject of witch-superstitions, published a few years ago:http://www.cjargne.it/noncicredo.htm

1975/78 was very much like it and worse came after the second oil shock. It only eased up 1993.

My eldest son who lives in Brazil tells me about the crises of those latter and later years but has a funny saying: We have learnt that crises come and go.

But of course, he's a University professor and maths researcher so he rarely notices someone is in arrears of payments for half a year or more.

My two sons who live in Portugal and myself when I stay there have noticed this crisis has a peculiar twist: instead of payments becoming very slow as in all all liquidity crises, this time unemployment is the great worry.

Payments and "money velocity", the old bugaboo of Keynes/Fisher equations seem not have slowed down substantially.

Well, all this will be properly studied in the next couple of generations if we don't blow up the whole works before.

Emigration is the great weapon of the Irish, Portuguese and Italians. As against Germans who lose the use of the language after a few years abroad as "forced" emigrants, (it was my German teacher of German who first made me notice this) Italians, Portuguese and Irish never lose contact with the mother country and families. They help restore economy to a large extent.

Well, small consolation for the hellish period we are going through.

More than anything I keep worrying about the submarine dangers lurking about but I won't name them otherwise I'll be called whatever-phobe by all the idiots who still survive here.

But if those hidden crises waiting to happen blow up before this downturn smooths out, there'll be serious, tragic events.

Hope everything can improve quickly for you; wish I could help factually rather than in words but although I've not yet stopped my intervention in the economy, I don't think I can be of much use.

Mainly in Peru where I have only academic and very loose journalistic contacts.

PS I never realized the joke about witches was common in Italy too. But then my Italian is worse than my German and that is saying a lot as a couple of German friends here can attest...

Many thanks for your kind words - always good to remember the struggles of the past.

During the downturn of 1974/1975 my father was employed with Chrysler of Canada. As a mid-level executive he was on part-time lay-off, two weeks working/two weeks off. Christmas of '74 was spent with the least number of gifts we children ever received. I remember it well.

And yet, we had more faith in Pierre Trudeau and Gerald Ford - who today seem like moral giants compared to this lot leading us in Europe.

And I remember the second oil shock very well also. My father was spared from lay-off in 1979 only by his untimely death from cancer.

The third oil shock did not touch the US, but the sky-rocketing value of the dollar under Reagan hit Italy hard in the mid-80's, defeating all attempts to rein in inflation.

And, let's be honest, the Invasion of Iraq almost a decade ago may be labelled the fourth oil shock. I remember in the mid-70's, it was common on both sides of the Atlantic to say that "Europe is finished. Saudi Arabia will be the new Super-Power, not Europe". And as inflation was shooting up over 20%, both in Italy and the United Kingdom, that analysis seemed accurate.
Given the price of petroleum today/over the past decade, I suppose we must say the Euro has been a great shield - in reality, Europe has resisted high oil prices a lot better this time around - although there are limits to all things, and we seem to have reached them.
Last week I paid €1.80 for a litre of good white wine from a farmer in Slovenia - and €1.82 a litre for the petrol to get there.
We had a subsidised petrol scheme here on the border for many years. Since we were on the border with Communism, the government created a "zona franca" for butter, meat, sugar and petrol. We managed to keep this going for a decade or so after the fall of Communism. Actually, my Senator did not see the need to fight for the renewal of the zone in 1999 - and I pounded my fist on the table (literally) and insisted cheap petrol prices had a powerful effect on voter behaviour - and that we damn well better make the fight: the result was that we got the EU and Rome to agree to one last five-year period of the "free trade" zone here.
Thus, as late as 2002 I was still paying only 35 cents per litre for petrol on the Italian side of the border (60 cents in Slovenia at the time). So, 1.82 comes hard to all of us. And there is no end in sight to the rises. And as Slovenia slides toward insolvency (next month, it is said) they are quickly raising petrol prices also - from 1.38 to 1.57 in the last two months.

It's all about oil and energy prices, isn't it? That is part of the real story here. I think Germany is right to exit nuclear power - but the timing is not propitious. In the meantime, Italy has moved aggressively of late, but ten years too late.
I see Portugal's renewable energy source production is now 50% of electricity in the country. Bravi! We are at 28% - and moving up rapidly. This is the main problem in Europe (outside of Scandinavia). Were we at Portugal's percentage our economic problems would be over.

Yes, Portugal's renewable energy production is a blessing. Occasionally getting up to almost 3/4 of total. Over 40% from wind, the rest from hydro. Pity electric cars aren't getting popular all that fast.

Well, I know all the arguments against electric cars but with so little pollution (Portugal got rid of most her obnoxious chemical waste long ago) the main energetic worry of the country is balance of trade.

Trouble is that Portugal, like a lot of Spain looks as if she'll take off one gusty day with all those wind turbines...

It has had a second advantage: exporting a lot of those gigantic fans and getting a lot of Chinese capital to build more wind turbines and exporting energy.

But as in most other EU countries it isn't solving the main problem: unemployment and liquidity.

If there isn't a secousse (as Marie Claude would put it) the path ahead looks hopeful.

If an unfortunately very probable financial turmoil doesn't occur in the City or a social upheaval in Spain or France (somehow to me it looks less probable in Italy) we may all yet escape a terrible fate.

If not, or if the USA hits a renewed financial panic, the Middle East erupts for good, Japan's debt chokes the East, or Northern European recessions get serious, I'm afraid we are in for a really unpleasant times.

When a banker makes a bad loan, there are two people at fault. The borrower who is unable to pay, and the banker who authorised a loan he should not have.

Evidently in your version of Capitalism the bankers are never wrong. Evidently you believe in Capitalism for the poor and Socialism for the rich. That is exactly what is wrong in the US these days.

Deutsche Bank was the leading financial institution involved in marketing toxic American mortgage-backed securities around the world. Even more so than other American banks. They agreed a short time ago to pay the US government $120 million in an out-of-court settlement, admitting to banking fraud.
Aside from the fact that this is a pittance - where was the Bundesbank? Their role is to monitor the activities of all banks in Germany. In half a dozen areas, the Bundesbank utterly failed in its monitoring role. Yet they absolve themselves of all responsibility.

So apparently in your version of Capitalism - only the Greeks - where in every city there are now people rummaging in the dumpsters looking for food - should pay.
Capitalist bankers should never pay, right? Great version of responsibility: we call this the Golden Rule: Those with the gold make the rules. Taking the Capital out of Capitalism and making it answerable to nobody.

Sometimes I wonder; you claiming to have profound financial knowledge (didn't you work for a bank?), but mixing up a bank's name with its location of jurisdiction.

Until February 2012, Deutsche Bank AG organized all its U.S. operations as subsidiaries of the U.S.-registered holding company, Taunus.

“Taunus Inc.”, being a fully-fledged US company, fell under US jurisdiction, US banking supervision and US taxation. Almost all of the company’s employees were US subjects – and all its traders were.
German (and other eurozone countries’) banks and investment houses registered independent subsidiaries in the U.S. and the U.K. exactly for the reason to circumvent Germany’s (and other eurozone countries’) tighter supervision, higher taxes, and tougher regulation laws.

In the wake of the SEC’s investigation against Taunus, Deutsche Bank has applied to ‘deregister’ Taunus in the U.S. as a bank holding company. Of course, the US treasury dislikes this as well. Consequently, following Deutsche Bank's reorganization, the Fed said it intends to revise the regulation of foreign bank organizations.

Therefore, Deutsche and other foreign banks may need now to consider other alternatives such as merely injecting capital, retaining earnings, reducing riskier assets, or exiting the U.S. market all together.

Even if foreign banks manage to avoid these new restrictions, they may still be subject to other provisions under the Dodd-Frank Act. For example, both, Barclays and Deutsche Bank, have investment banking operations in the U.S. that will need to comply with the Volcker Rule.

In any case, their future banking activities in the U.S. will no longer be mere subsidiaries of an intermediate U.S. holding company (like Taunus Inc. was).

The world is flooded with all types of product....there is oversupply of virtually everything

The problem is lack of demand - increasing with the cut backs now all over the world....and the capacity to purchase goods of the developing countries growing middle classes is not exactly the same as those in the EU.

The problem now is that it will be very difficult to get out of this downward spiral.....and the EU, Germany and Merkel are seen by the vast majority as responsible - UK, USA, even China have done all they can to try to stimulate growth, which is the only real way out

Just because people have the same views does not mean they are the one and same.

Now I know my defense of Maher will bring forth another conspiracy theory from you.

Conspiracy theories are prevalent in dysfunctional societies with centuries of authoritarian rule and scant experience with democracy.

And one normally associates this conspiracy culture in the middle-east. However thanks to the internet we are discovering that central Europeans also have a conspiracy culture, a product no doubt of centuries of authoritarian rule and I suppose it will take more than a few decades of democracy to wipe out these traits of a dysfunctional society. In mature democracies conspiracy theories are the sole preserve of a tiny fringe.

Okay my English is not so good, but for me the style and language is very similar. The same talk of Germany crushing/forcing/sacrificing/medieval economic superstitions/provoking fear and trembling obedience from her partners etc etc....

Of course you write a little differently in a discussion than in a column.

And over time there were several incidents such as AEP writes from Rome --> A J Maher presents us insights how Italians view the Euro now...

Also the themes and the focus of different themes is the same which can not only be explained by A J Maher reading AEP.

Same talk of collapse of money supply etc etc...

And the world view and general assessment of the Euro mess seems to be the same too.

As I said, I have this "theory" since 2011 and over time I observed lots of overlap.

Well, both of them have great entertainment value. AEP’s Germany hatred is more, how shall I put it, "sophisticated".

He probably was jilted by a German lover, male or female, when studying in Tübingen or Heidelberg whilst Maher’s Germany hatred is more down to earth, more “honest”, so to speak.

His particular chip on his shoulder is more family background related, like with some of the Morlocks. He is funnier though. This is why I prefer him. Pedro and I are both infatuated with Maher or, rather, Maher speak. Especially when he slings it out with our Cicero and is knocked down repeatedly and always gets up for more punishment. Attaboy Maher.

Just to defend Maher, with whom I find myself quite in agreement (except about the inevitability of Euro-failure)...

Ad hominem attacks are not an answer to his quite coherent attack on ECB and EU political and economic policy.

The current strategy is not working. Greece needs a small bailout and the ECB needs to rev up the printing presses. There is no danger of inflation in the midst of a Depression - and slamming down on the monetary brakes is insane.

Neither the US nor the UK are at any risk of hyperinflation. (Other problems, perhaps yes).

Being forced to wait 6-8 months to get paid in Italy has nothing to do with reforms - it is blocking reforms, blocking growth, destroying support for the Euro, represents a tight money policy that is absolutely insane given international trends and is forcing our economy toward a retreat from globalisation - we will survive by refusing to purchase other nations' goods. Ludicrous. And one that will soon spread unemployment to our other G8 economic partners.

AEP’s strong criticism of GERMAN AND EZ POLICY is more sophisticated. AEP has never manifested racism towards anyone.

“Maher’s Germany hatred is more down to earth, more “honest”, so to speak”.

Correction:

Maher’s strong criticism of GERMAN AND EZ POLICY is more down to earth, more “honest”, so to speak. Maher has shown himself to be a strong critic of the Goldhagen theory, which is PROOF that he has no hatred towards Germany. What I really can't stand about Maher is he never deigns to answer my crap.

My own remarks about the Brits are par for the course, naturally, but then I make the rules here about what constitutes “hatred” of others and the over-sensitivity” of those who feel it.

(BTW: “Why beholdest thou the mote that is in thy brother’s eye, but considerest not the beam that is in thy own?”)

“Especially when he (Maher) slings it out with our Cicero and is knocked down repeatedly and always gets up for more punishment.”

Correction:

As I know zilch about economics (my speciality is "Morlocks") and have no idea what Maher and Cicero are talking about in their discussions, I am actually incapable of judging who is “knocking down” whom, even when I read their postings (which in Maher's case I don't). Nevertheless, as a German, La Virity gets my blind support. Who cares who is right? I certainly don’t.

"But it's no "conspiracy" if Ambrose Evans-Pritchard writes in this forum. Hint: my real name is not enlisted"

Newsflash for you, euroscepticism is very popular in the UK, so you are going to get a lot of Brits who sound like AEP. Maher's writing style is quite different from AEP.

Middle-east conspiracy theories existed long before European colonial rule and its aftermath and long before the USA became a superpower. This shows your stunning lack of historical knowledge of the middle-east.

The fact that you believe most of the current Middle-east conspiracy theories shows how much you yourself are a product of a society that has a lot of similarities with the middle-east - centuries of authoritarian rule.

Not my fault if you lack the critical thinking skills to realize what all those centuries of authoritarian rule did to German culture and mentality.

to enlisted about Maher being AEP.
to Pumpernickel on Maher being Charlemagne

For a while I thought Maher was a regional bureau chief somewhere in this world. He always wrote from the same place where the other fellow was and their confessed backgrounds are the same.

So I wrote to the Economist bureau chief and asked him point blank: are you Maher? He said he wasn't.

I was relieved. Maher is a total ignorant of maths and is so biased I never believed he could be employed by the Economist despite the low level of writers John Micklethwait has chosen for important positions.

Obviously, you all can think of me as naive just to believe the word of an interested party.

Well, I have the word of an Economist regional office manager and having first met the Economist senior people in 1947, I simply can't believe anyone in the magazine would ever lie.

The day I will not believe the word of a local Economist bureau chief, the Economist will flounder. I have this magic power.

Somehow, I think I shouldn't have drunk that second whisky after dinner. It disagreed with me. I've always been a poor drinker.

If any of the people who think Maher is Charlemagne ever took the trouble to READ what he says, then they would know immediately that for reasons of language, style...etc., he can't possibly be working for TE. There was no need to write to the magazine to try and find this out.

What at one time I accepted as possible was that Maher was another, far less talked about Economist staff member, who's now located many miles away from S. James's St. where The Economist HQ stand upright with a beautiful view.

That had nothing to do with style, language...etc. as you put it.

It had nothing to do with a slip on Maher's posts.

Maher explained a couple of times in his posts he was coincidentally in the same place as the other gentleman with whom I had occasionally exchanged previous correspondence with.

To the point a New Zealand poster I don't correspond with frequently remembered my birthday and we are having a merry time about it right now in another thread.

With the comical effect our resident disbeliever in anything serious any non-USA citizen says has just replied to me about it (a couple of posts above). As usual with her, completely off base.

A little humour never does any harm. You used to believe this when your were Schade-no "n"-freude cherished son. Has the loss of paternity upset you that much?

Now seriously.

Although very amateurishly and non-professionally as you, I too have a passion for styles. I even call them "written accents".

But they can be effectively faked.

I have known the insides of this magazine since 1947. Not the present tower, of course; rubble, if I remember well, was all that could be seen of St. James Church, a block away, just next to where my guardians' flat was (I was 15 then).

So I did study and tried the Economist Style Guide (published later). That makes the Economist's staff writing very, very similar for all of them.

Even when they write books of their own (generally excellent stuff, you should try them) one can occasionally notice the Style Guide influence.

I know: one of the best The Economist contributors once gave me the honour of asking to help researching the sources (and translate a bit of just post-medieval poetry) and was kind enough to make a totally undeserved acknowledgement of it.

But one can fake styles.

In 1980 a gent in one the American Embassies in Europe asked a friend of mine, with the same profession as his, even if different nationality, if I could write a piece of news in the style of the Washington Post.

Very doubtfully, I tried. To my great amazement, it was approved and praised. Kindness, obviously.

So styles can be faked.

But you certainly know a much greater deal about this than I do.

As they say in my favourite fishing village: "Just trying to teach the Lord's Prayer to the vicar".

That's w'at Ah'm dooin', luv.

Bwt yew know oos, Mancunians. We never waste an opportunity to show off, do we?

Sane people are never ashamed of their nationality. That's only for complexed individuals who project their feelings of inadequacy onto others.

I, personally, would never be ashamed of any nationality I might be born with, even if it were yours or your ancestors before 1776.

Nationality is an accident of birth or of choice if one changes it as a grown up.

I've explained hundreds of times why I don't usually mention my nationality on the Economist threads.

First, as you are a living example, the world has become far too much stereotyped for educated people: people will react to your opinions on account of your nationality rather than the worth of what they write.

They (you) will say: "you write that because you are Ruritarian; if you were Bordurian you'd say the opposite".

You, Marie Claude and a few other posters are the champions of this silly way of showing their inadequacy complexes.

You, I never read except by accident, as now.

Marie Claude changes her pen name every thirty seconds so my rather slow brain takes a bit of time to notice who she is.

Fortunately, the other Morlocks, as good old Pumpernickel baptised you all, have gracefully disappeared to the satisfaction of interested and interesting posters.

My second, and probably main, reason not to state the colour of my passport is the fun I have watching people trying to guess it and keeping getting it wrong.

There is probably a third reason: I love so many nationalities (Zulus and their beautifully painted houses very much included) I sometimes have difficulty in knowing what am I emotionally.

By accident, I've met knowingly very few Xhosas so I don't include them here despite their houses being also very beautifully painted.

What nationality I feel like being is far more important than the official stamp on my papers.

As you will never give up, I'll give you a hint: I was born more than a thousand miles outside the nearest point on the Iberian Peninsula (Spain and Portugal in case you are a bit lost).

The Orkney's, Sweden, Poland, Greece, and most of the Sahara would be within your remit.

Well, to be honest so would Denmark, Hungary, Slovakia and Serbia but I'm just confusing you.

And a boat somewhere in mid Atlantic and that would really be romantic. Even more than a tent in some some Sahara Waaha. And some are really beeoootiful!

But I won't go any further nor will I confirm or deny any guess.

In fact I'll go back to my habit of not reading you.

Marie Claire after all, has occasionally some interesting points of view and information. And knows a hell of lot of History for which I often envy her.

it has been brought to our attention that there is reason to believe that you are not who you pretend to be. Please be so good as to tell us whether or not these rumors are grounded in reality.

Since we place the highest trust in your honesty (we met your predecessors for a cup of tea in 1947), we will assume that you will speak nothing but the truth, as the honor code of the International Society of Secret Agents demands.

Should that turn out not to be the case, we will consider the organisation you work for doomed, betraying the very values which we have come to believe you stand for when enjoying the aforementioned cup of tea.

Mrs. Merkel is the elected head of the German government, not the almighty dictator of the eurozone. She answers to her voters and taxpayers, not to those in Italy, Spain or Greece. Her policies are approved by a majority of her voters. It seems you're confusing Merkel with your own elected representatives. Turn to your head of government to complain about your country's eurozone politics . . . not to Germany's.

Yes, she's everything you say but she also assumed the leading role in the EU and speaks as such. See her positions in the EU meetings, her head to head meetings with the French president whoever fills that position. The famous Merkozi is proof of that. But then again, you might be right:she just pretended to be a leader of Europe and in her mind she always remained the simple head of Government in Germany. By this logic Germany is not the leader of a EU and should seriously consider leaving the Euro. If EU is only that, a UNION then every member should assume their responsibilities and make good of them. And obviously Euro was build on false and mistaken assumptions. Some, like Germany took advantage. Others, like Greece, Spain, Italy responded by taking advantage in other area. As such all are responsible. If Angela fails to deliver on her leading role there's no surprise she starts being criticized and rightly so. She should either let someone else take the leading position in EU or if not, get used of being not respected as such.

My understanding is that Merkel didn’t “assume the leading role in the EU” (lion14). She rather looks after the interests of her German countrymen and speaks out when these interests are jeopardized by decisions made (or suggested) by third parties; e.g. the financial demands toward German taxpayers from other European leaders, who, of course, are predominantly looking after the interests of their own countrymen.

Since all demands from other European leaders, namely from GIIPS-countries, are directly aimed at the pockets of Mrs. Merkel’s electorate, the German taxpayers, her opinion and often even her agreement is required. This is what you mistakenly confuse as “proof that she assumed the leading role in the EU”. In the moment other EU countries stop trying to dip into German taxpayers' pockets, Mrs. Merkel’s role within the EU will shrink to the proportional size of her small country. It's as simple as that.

lion14: “Germany is not the leader of an EU and should seriously consider leaving the Euro”.

I agree with the former and would like to agree with the latter. However, what the advocates of such solution fail to realize is that Germany is morally and psychologically, as much as economically, invested in both the Eurozone and the very idea of Europe. For Germany “Europe” forms a central political plank. Rightly or wrongly it became a major part of the country’s entire postwar foreign and economic policy.

About "the famous Merkozi is proof” (lion14): France and Germany (together) are the glue which holds both the Eurozone and the whole idea of Europe together. It was the dichotomy between these two core continental powers which led to the creation of the Coal and Steel Community in the first place, which evolved into the Eurozone of today.

A euro without Germany would neither be feasible nor attractive for the rest. Her major trading partners in Europe would crash economically. That’s why Germany can’t “just leave” the Eurozone, knowing that the whole euro-concept would collapse within months (if not days) . . . with all the involved problems for the rest of her (then former) eurozone partners.

That’s the true reason why even for Eurosceptics à la Charlemagne a Eurozone without Germany is almost completely inconceivable.

Really the root of the current crisis is a balance of payments crisis.
But if we want to talk about Banks, then the creditor is as much to blame (if not more!) than the debtor
Everybody speaks of the reckless behaviour of Spanish, Irish, or Greek Banks.....but where did they get the money from to be reckless.......oh yes from German Banks (and French) at extremely low interest rates .....which now everyone is saying did not reflect risk - was this not incompetence ? recklessness? too
The credit crunch in the Mediterranean is caused by these German (and other Banks) asking for their money back, to save their own Banks

Isn't it quite normal that borrowed money has to be paid back? Repayment is the foundation of all lending. Why do you act so ignorant about this commonly known fact? Or are you suggesting that the managers of Spanish or Greek Banks are so incompetent not to know this?

Oh, sorry, I should have said it's very clever to borrow money and expect not to pay it back!

Of course, to expect repayment is the perverted moral of a capitalist pig. And a capitalist pig is worse than a commie bastard, and is much worse than a dirty anarchist who is in fact less dirty than the capitalist pig or the commie bastard.

"Long live the Anarchist Federation of Europe! Long live this organization without capitalist pigs!"

". . . [they] will never allow German exports to destroy their industrial base".

Germany is the world's most prominent exporter of highly sophisticated capital goods - a global market segment these countries never occupied.

The shop shelves in "Southern Europe" are stocked with consumer goods from China, Japan and South-East Asia, as everyone can observe during a visit. Almost no consumer goods are "made in Germany". So, just continue to live in your world of self-deception.

Isn’t it sad to see a grown up man who speaks four languages and can manage in another four and who lived in four countries and travelled all continents and studied in three universities,is well versed in classical studies and economics by his own claim …
is it not sad to see such a man in glee about any “bad thing” befalling Germany, like importing more from Italy than exporting to it. Falling over himself in joy like a child at Christmas, rubbing his hands in schadenfreude about any bad numbers that come up in the German performance? Searching for them.

Doesn’t it make us feel good to be not like such a man. To genuinely be glad that Italy does so well for once? Really happy for the Italians without reservations?

Are we not of a superior kind compared to this man? Lords in comparison with peasants? Oh yes, it does make us feel good.

On the other hand Germany is the biggest importer of food stuff from these countries. Our shelves are full of wine, cheese, olives, tomatoes, oranges, lemons, you name it from the GIPS countries. Not so in England, France, Spain where you will be hard pressed to see imported goods from other European countries. So much for goodwill and cooperation. And yet they call us selfish, because we produce goods they like to buy. Nobody forces the Italians to import 350,000 German cars and only export 35,000 Italian cars to Germany. Why don't they export more? Uh .... there is the rub .... consumers do not know Fatherlands when it comes to spend their hard earned money. They want the best.

Lurking around in Aldi in and Lidl hunting bargains which he stacks in his 10-year old 2nd hand VW Passat if not filling out forms at the tax office or digging holes in his garden "enjoying" gold "over 2000 soon".

No Bunga bunga, no fun, no boat, no nothing. No wonder Italy has problems selling cars....

The problem with this very German philosophy is that, despite the fact that Italy is returning to its role as Europe's second-most successful exporter, not all of Europe can do that.
The Greeks are shippers, not manufacturers and not exporters. Looking to transform them into a nation of exporters is not the answer and misses the point.
The British are neither manufacturers nor great exporters, but I would hardly call their economy weak for that. British cinema alone is worth more than the German auto industry.
Beggar-thy-neighbour trade policy is not the answer. Nor does it make Germany an important country, despite their conviction that being an economic powerhouse automatically makes Germany prestigious around the world. It doesn't.

Anyway. My protestations are mostly against Josh's racist idea that Italy is an "incompetitive" country. Very insulting and very laughable, given that Italian exports are the one thing that have got along quite well in the midst of this crisis. Almost the only thing.
Therefore, the economic and political analysis of the crisis - Josh's analysis - is highly flawed.

The crisis is not about corruption - the BRIC countries are FAR more corrupt than Italy is - I don't care what a few "international analyses" (coming from northern Europe) say. There are large parts of the Italian economy - most parts of the economy, if not of the country - where citizens NEVER pay bribes and are never solicited for a bribe. Try that in Russia, India or Brazil. (Give me a break).

So, let me issue my challenge to you: what other country has achieved a trade surplus with Germany?
Until you can answer that question, I will thank you not to repeat the ridiculous assertion that Italy is an uncompetitive country (not that you ever have - thank you.)

Enlisted,
Love your post:
I shop in Lidl to bring home bargains in my 10-year-old 2nd hand Peugeot.
I have also put up hundreds of political posters and distributed several thousand leaflets against Bunga Bunga in every election over the last 18 years (between national, regional, provincial and municipal elections - about once a year).
I have no boat - although my best friend does. We got drunk at a county fair together 2 weeks ago - and he apologised for having never taken me out on his small yacht any time over the last 20 years, despite talking about it forever.
Italy has problems selling cars because Marchionne refuses to spend a cent to renew the product line. He also prefers trying to sell big-engine American cars in Europe rather than small-engine FIATs. This in the midst of the most expensive petrol and biggest economic crisis ever seen in postwar Europe. Jerk. FIAT is sitting atop €27 billion in cash reserves, but refuses to spend 400 million to bring out a new model. But, he spends 1.1 billion (including 400 million of actual FIAT money) to open a new factory in Serbia.
How popular do you think the new Serbian-made FIAT 500L minivan (built to replace the FIAT Idea/Lancia Musa) is going to be in Europe? Or in Italy? Would you buy it? Do you think FIAT's loyal employees in Italy will buy it?
He put it there because Russia offers to import Serbian merchandise with only a 1% duty. So he thinks this will be an important ticket to the Russian market...

I wonder why German discount chains in Italy are shelving German-made processed and frozen foods, while I noticed in Germany that shelves were full of Italian and French wines and cheeses (cheaper, btw, in Germany than in France itself).

Concerning processed food you might be right, but the ingredients are often from other EU countries, I guess.

Germany's food-retail offers probably Europe's most competitive prices as we noticed when being there. Many items are much cheaper there than even in the US, my wife observed when shopping in Germany.

The contrary is true for e.g. France. This probably explains France's relatively high restaurant prices mentioned by pumper.

However, for all his obvious flaws, I will never stop being amused by the almost religious seriousness with which Milovan/Joe's debates each and every odd subject tossed at him (from the quality of cheap Slovenian wine to German frozen pizzas to Czech sun glass retailers to what-have-you; too bad he stopped relating details of past flinches LOL). Just throw the words "Italy" or "Italian" in a statement and adopt a slightly provocative tone, and you'll get an excited page-long reply within the hour.

The Italian economy is forever in the doldrums because your competitiveness is low. And your competitveness is low because you produce at too high costs, are too slow and inflexible in adapting to globalization (unlike your more agile neighbors in Northern Europe), and because your public adminstration is not only grossly inefficient by OECD standards, but also Western Europe's second most corrupt after Greece's.

1) Italians are unrivaled champions in distrusting their own banking system and state. The Spanish (pop. 47 million, and less afluent than Italy) have 1.5 trillion in deposits at domestic banks. Italians (pop. 60 million, and more affluent) only 1.4 trillion.

2) It's not just Italian capital leaving Italy, but also e.g. German investment: Before the euro was introduced, Germans invested 2/3 of their savings at home, and 1/3 abroad, mostly in the EU. After the euro's introduction, 2/3 were invested abroad, and 1/3 at home, which cost Germans about 1% of growth annually. Now the figures are back to the old normal. So what are you complaining about?

Bottom line: Capital is fleeting. Improve investment conditions and trust in your banking system, and you'll attract more capital. If you don't, money will remain tight. It's that simple.

May I suggest that Italy's main problem is the 'quality' of her politicians, e.g. Berlusconi followed by an unelected Goldman Sachs stooge.

Tell me, Josh, who is this fellow?

During WW2 he wrote for a fascist newspaper and a clandestine, anti-fascist paper at the same time.

He was three times head of the government from between approx 1970 and 1992, but also headed several ministries, during which time he was involved in so many scandals that it would be impossible to list them here. Created a shadow current within his own party supported by right wing Roman Catholics.

Heavy involvement with the Mafia, so much so that it was believed he was actually a member himself. In 2002 he went on trial in Palermo accused of Mafia links and was acquitted, but only on the grounds that the prescription dates had expired.

Was sent to trial in 1979 for the murder of investigative journalist Mino Pecorelli and sentenced to 24 years’ imprisonment, overturned on appeal. He could never have gone to jail anyway, since by then he was too old.

For the last 20 years he has been Senator for Life, no doubt for ‘services rendered ‘ to his country.

Mrs Thatcher said this of him:

"He seemed to have a positive aversion to principle, even a conviction that a man of principle was doomed to be a figure of fun."

This is the man who Joe triumphantly told us “set a trap” for Mrs Thatcher.

His main political opponent, Bertino Craxi, was so corrupt, even by Italian standards, that he had to flee to Tunisia where he died in disgrace.

So yes, the Italians are 'civilised' and we're all 'barbarins' north of the Alps, but I think there's a bit more to it than that.

They are so much more honest and naive than the civilised Mediterranean world.

But not their elected officials.

Yes, civilisation has long been corrupt and cynical. It has been so for millennia.

BTW, no. Andreotti may be Beelzebub, but a member of the Mafia? Please. He has always been directly supported by the Curia - they are much more powerful than the Mafia. And if you really understood the Roman Curia you would have more respect for the Sicilian Mafia as a resistance organisation - one school of thought believes they were founded as an underground organisation by Muslim nobles in Sicily after the Christian Reconquista circa 1000AD.
Would Andreotti have made electoral deals with the Mafia for decades to keep the "Communists" out of power?
Absolutely.
BTW, in 2001 Berlusconi won 61 out of 61 first-past-the-post electoral districts in Sicily. That year Andreotti abandoned Romano Prodi's coalition (although Prodi himself was not running) and supported Silvio during the elections.

A list of Andreotti quotes:
In response to opposition politician Giancarlo Pajetta, who had claimed that "power wears you out" (il potere logora), Andreotti said "Power wears out those who don't have it" (Il potere logora chi non ce l'ha). This sentence became proverbial and is widely recognized in Italy.
"Power is a disease one has no desire to be cured of."
"You sin in thinking ill of people; but you often guess right" (A pensar male si fa peccato, ma spesso ci si azzecca).
"Never over-dramatize things, everything can be fixed; keep a certain detachment from everything; the important things in life are very few".
"I recognize my limits, but when I look around I realise I am not exactly living in a world of giants."
"Aside from the Punic Wars, which I was too young for, I have been blamed for everything.
"We learn from the Gospel that when they asked Jesus what the truth was, he did not reply."
"You always find the culprit in crime novels, but not always in real life."
"I don't believe in chance, I believe in God's will."
"My whole life is a dance." (In response to a question whether he had ever danced in his life.)
"I don't believe that we can divide mankind into the wicked and the angels. We're all average sinners."

Milovan/Joe is such as spoilsport - Andreotti, of course. I admit your hint "During WW2 he wrote for a fascist newspaper and a clandestine, anti-fascist paper at the same time" kept me guesing. But then again, what can you expect from someone who was the catholic church's and the mafia's contact in government at the same time for decades.

Milovan/Joe is a good illustration why such underworldly crooks can get away with it all in Italian politics and still even be respected: because the audience is too fascinated with the show put up for them: all those intrigues and machinations, the dealing and wheeling, the whole l' art pour l'art stuff without ever getting anything done except during those brief interludes of a few productive months every decade or two when desaster (e.g. the very real danger of insolvency, as in 2011/12) is imminent.

They are so much more honest and naive than the civilised Mediterranean world."

__________________________________

Not that I am a particular fan of such stereotypizations, but the argument cuts both ways.

Northern Europeans tend to consider Italians to be less "civilized", as well, because of their notorious inability to organize themselves well on the supra-clan level – which is also the main reason why, since the advent of industrialization/ modernity (which demands a high degree of "abstract" organization), Italy has always been lagging behind the vanguard of the most developed Western countries – a trend that's still intact, as Italy's epic difficulties in closing the considerable competitiveness gap with Northern Europe and even France demonstrates.

On the plus side, strong clans can be kind of comfy (if a bit suffocating IMHO).

I campaigned against him for years. Resisting people like Andreotti, forcing them out of power, was one of the primary reasons I got personally involved in politics.

Andreotti was sponsored by the Vatican and the Americans for decades; that's why we could not get rid of him. Everything else is racism on your part.

Another story for you:
In the early 90's I was chatting with an old friend - Jewish - in Washington, who was working for a Senator at the time. Although this friend was an old college roommate of mine, we had never discussed Italian politics before (too long a story to attempt for us, with non-Italians); we were discussing the Palestinian problem when all of a sudden my American friend launched into an attack on Italian policy. (I believe I had mentioned something about Italy seeking to mediate between Israel and the Palestinians...)
He told me, "You don't really think Andreotti talked to Arafat all those years without Washington's approval, do you?" He then launched into a fairly detailed account of Italian historical relations with the PLO. I was floored; this from a friend whom I had never heard utter the name of a single Italian politician of the postwar period - and who I had seriously doubted previously was able to name more than one.
Suffice it to say that over the next decade I discovered from the Italian side that he was basically right.
Washington used Andreotti to negotiate with Arafat in the days when direct diplomatic contact was politically forbidden (mostly by the American Jewish lobby). That lobby understood that Washington had to speak SOMEHOW in an unofficial manner to the PLO - and basically they tacitly agreed to this strategy.

All these geopolitical games were played entirely over the heads of Italian voters - and there was not a damn thing we could do about them. That is part of what it means to be a defeated and occupied country. Italy lost its sovereignty on 8 September 1943.

"Northern Europeans tend to consider Italians to be less "civilized", as well, because of their notorious inability to organize themselves well on the supra-clan level"

The "Clan" level? Are you confusing us with some barbarian, Scandinavian tribe?

Italians have been organised for centuries into "Communi" - the "Commune" or Municipality. It is City against City in Italy - and always has been.
I would expect a German to understand something about that.

The only Italian Prime minister I have ever known is Berlusconi and if they could tolerate him, they are capable of tolerating anybody.

From your description of Andreotti, it appears that all Italian Prime ministers are corrupt and have shady dealings with dubious characters sans the underage girls.

It also seems now Berlusconi was nothing out of the ordinary as Italian Prime ministers go.

For the life of me I could never understand why Interpol didn't issue an arrest warrant for Bunga Bunga but considering the fact in Italy that is what passes for as 'normal' behavior of politicians, it makes sense now.

Losen up a bit - I was speaking figuratively. I am familiar with the historical reasons behind the strength of Italian municipalities, cities and other small societal "units" and the weakness of the state. As far as the organization of society and state are concerned, Italy is essentially "tribal", and Scandinavian countries the most "civilized" - contrary to your prejudices.

Josh, when you speak of the "organisation of society" you are talking about civic sense or civil society.
The "civitas" was invented in Ancient Rome. That civic spirit should be so weak in the country that invented it is purely a function of the occupation of our public square by the Church, which had so thoroughly corrupted the peninsula. This has been an on-going battle for the last 100 years and progress has been slow but steady - except for the Christian Democrats/Berlusconi.

For example (aside from all the pushing and shoving in public places) public bathrooms in Italy are atrocious. And yet private bathrooms are maniacally clean and aesthetically, stylistically beautiful.

This is a major reason why I chose many years ago to live in FVG: Here, there are red lines clearly indicating in the post office, bank, public offices, etc. where citizens should stand so as to guarantee the privacy of the person being served. Something I find intolerable anywhere south of northern Italy.
Also, we have been "southernised" over the last 50 years here. When I was a child, my Genoese father preferred no conversaton at the dinner table until we were finished eating - and it was not common up North to find restaurants loud and raucous. I still detest eating in loud trattorias, etc. and also for that reason much prefer the Czech Republic and Slovakia (aside from knowing all the best local eateries here that are not too trafficked).

Certainly, Prime Minister Romano Prodi was not of that cut; nor was the socialists Giuliano Amato or Massimo D'Alema. I would also speak highly of former-Prime Ministers (deceased) Spadolini and Giovanni Goria. Not to mention the legendary Alcide De Gasperi, a father of European unification.

But yes, the majority of Italian prime ministers are assumed to be quite corrupt here. They have also been directly sponsored by the Vatican against the Left. What do you make of that?

Prime Minister Bunga Bunga's off-colour comments and shameless sexual dalliances were a new low for us and disgusted the majority of the country (remember, when he won the last elections, he obtained only 37% of the vote, and his allies another 5%.) Making sure the Opposition to these corrupt class of Catholic politicians remains fragmented into many smaller parties is a principal milssion of the Vatican's back-room manoeuverings.

What do you make of that?

An Austrian friend of mine, having lived here for 20 years, once said, "Italy lacks what we call Gruendlichkeit". "Getting to the BOTTOM of the problem and rooting it out". The approach to all problems is always superficial here.
Right.
Because, like the Czechs, Italians are basically allergic to religious warfare - a particularly nasty form of suffering.

Because deep down, we all know that to resolve our problems would require a revolution against the Church - and it is feared, rightly, that down that path lies a very nasty religious war, not to mention four centuries of Italian history demonstrating that the Papacy always loses those wars at home - and then invariably invites a foreign Catholic power to invade us and re-establish his power. One billion Catholics against 60 million Italians. We lose.

That is why Garibaldi was our greatest hero - not only did he never lose battles, but he attacked the Church frontally (only the Genoese ever had the cojones to do that) and, thanks to British support, won.

Don't you think it's a bit of a stretch to speak of Italy as "the country who invented it" when referring to something that has come of age in the Roman Empire?
Historical continuities usually thin out after a few millenia, especially when there have been hundreds of years of foreign domination and migrations, and dozens of cultural revolutions. There are limits to the concept of "identity" (sameness).

Josh,
A story for you:
A few years ago, I brought two friends to the US with me on a tourist trip. One Italian, the other Greco-Italian (grew up in Greece, on the Turkish border).
While visiting the Smithsonian Natural History Museum, we came upon an exhibit dedicated to Graeco-Roman civilisation. (Obviously, the "Anthropology" section, located just above the "Minerals" section and the dinosaurs below.
My friends started protesting loudly (in Italian). "What the f---??!!" "What is this? Our civilisation right next to the dinosaurs??!" "Oh right, just because the Americans have no history..."
I defended the Smithsonian (whose founder, James Smithson, was buried in Genoa). "Look, it's called Anthropology. Why shouldn't it be here?"
"OH THIS IS SO RIDICULOUS. HOW COULD THEY PUT US HERE!"
(At this points the guards were eyeing us carefully)
"Oh come on" I protested, "Ancient Greece and Rome is hardly current events!"
But you see, that is exactly the point. Ancient Rome and Greece are absolutely considered like current events here. That is yet another reason why Draghi and Monti will fight to the bitter end for Greece. Our entire educated elite (and not only) consider Ancient Greece OUR heritage as much as that of our Greek brothers and sisters - and more or less a question of Current Events.

The punch line is great, if completely over the top. But I'll give it a pass;-).

When talking about Italy defending Greece etc., here's something you are apparently completely unaware of: Ever since the early 19th century, the most philhellenic European country has always been - no, not Italy, and also not France or Britain but: Germany. Beginning with German romanticism, to the Prussian reforms of the (post-)napoleonic era to the introduction of ancient Greek (and Latin) in the "Gymnasium" curriculum (I believe in the imperial era), ancient Greece has been the role model in more than one way, not least because then-arch enemy France wrapped itself in the mantle of successor to the Roman Empire (just as medieval Germany had done itself - history never ceases to amaze), so that place was already taken... .

And it's not been a one-sided affinity. Germany has forever been the main European destination for emigrating Greeks, and Greeks are one of the best integrated minorities with no problems in making it into top positions. And before the crisis, Germany was consistently polled as the most popular foreign country in Greece. That obviously has changed now that Germany is perceived as the main culprit for the hardship involved in the rescue of Greece, but we'll see how things will look once the strom will have abated. The Second World War didn't destroy that bond, either.

Germans believe in taking a tough-love approach to help, and deep down the Greeks love them for it, knowing that somebody has to do what their politicians would never in their wildest dreams dare doing: taking on their own electorate. LOL

The idealized image of ancient Greece propagated in 19th century Germany was that of civic duty and personal liberties. That was the least the Nazis wanted. But they were good at making everybody believe their goals were noble until it was too late.

Josh, I have travelled often and extensively to Greece - and have friends in high places there. So, yes, incredibly (to you) I am quite aware of the ties of modern Greece to Germany.
My best friend - the brother I never had - is a top financial journalist in Athens. He was born of a Greek father and a German mother (who has retired in Athens).
We speak on a monthly basis, and mostly share violent words against Germany and Merkel.

For the record, Greco-Italian relations were at quite a low during the post-war period- until Greek accession to the EEC in 1980. The last thirty years have seen a sea-change in our relations, and the majority of Italians now have a Greek ancestor, in-law or friend. Many Italians have purchased homes in Greece (generally on the islands) and many Greeks have studied here (perhaps before moving on to England or the US, but mostly to return home).

Yes, I am aware the Second World War did not destroy the bond between Germany and Greece. Just imagine, we Italians were also involved in that foray, eh?

So, now that we have established how close both our countries are to Greece, why is it so difficult to say that gifting a few billion this year from our countries will reduce their deficit to 3% - and kick the can down the road for another year, buying time for everyone to consolidate their deficits - at a cheap price?
What are two or three billion to Italy or Germany? We have an annual budget over €700 billion. Do you really think two billion from Italy to stabilise another EZ country will be the straw that broke our camel's back?

p.s. Italian 10-year bonds today were trading on the secondary market at 5%. No sign of increases...

To answer your question: Friendship is no excuse to do something you believe is fundamentelly wrong and are convinced won't help your friend even if he begs you to do it. And the Germans (and a great many other Europeans) do believe just giving Greece more money as a gift without creating conditions that ensure it will bear fruit is simply wrong for all involved.

The Dutch, with whom I'm in close contact via my in-laws are a lot more outspoken about this, sharing the German way of doing business but lacking their long-standing attachment to Greece. In the case of Germany, quite vivid memories of which policies worked and which didn't during German reunification loom large.

But don't worry, the gift will come, anyhow - in the form of the next haircut, which will affect mainly sovereign creditors (first and foremost Greece's euro zone partners). And it will be more than just a few billions for each of the bigger euro zone member states. -

I'm actually not surprised you are aware of the depth of Greek-German relations - I'm surprised you admit they exist. And yes, I know that Italian-Greek relations have turned for the better in recent years. Good for you.

I hope your friend gets at least equally worked up about the Greeks' own wrongdoings as about the perceived cruelty of Ms Merkel - that'd be a welcome start. But then again, he's your friend, so maybe I should not expect too much objectivity on his part;-).

I guess that's why the Germans are putting more money on the table for Greece's rescue now and have always paid a larger share in EU subsidies to Greece than anybody else (nearly 30 % of a grand total of about 150 billion Euro in 30 yrs).

It seems to me that Germany is digging its own grave - to put 150 million (relatively wealthy) EU rsidents into depression of course has an effect on the world economy - which we now see - and these are the middle class that buy their products....or at least have done until recently....at a time when people are changing from Sainsburys to Lidl and Burberry to Zara......Germany could crash against a wall

Dont forget that Germany lent money to the Mediterranean Banks and directly to property developers - so if Spanish Banks have been reckless why is it that German Banks havent??

The difference between e.g. Germany and Spain is that Spanish private households have taken on horrenodus debt (of now about 300-400 % of GDP, more than in any other euro zone member state) - and with 25 % unemployment, there is hardly any room for further tax increases in order to finance higher yields on public debt.

That's different in Germany and a great many of other euro zone countries, which therefore would be easily able to pay 7 % on their debt. (Germany paid more than 7 % following reunification in 1990.)

This is getting boring. When will you ever understand that the idea that German taxpayers should pay the bills for foreign banks' bad businesses and foreign nations' bad politics in the past is idiotic, to put it mildly?

They can't, and even if they could, they shoudln't. Period. If you want that somebody pays for Spanish, Greek, French and so on banks: ask Mr. Osborne. If you want that somebody funds the standard of living of Spanish, Greek, Italian and so on public sector, retirees ...: ask the Britsh taxpayers.

But please, please finally stop to come up day after day with the same old stupid sermon 'let the Germans pay'.

For about three years now you have been telling us the same story: If only the Germans were willing to give their poor relations more of their money, the acute €-crisis would be over and then the details could be sorted out. Problem is: This story is dead wrong!
Greece is about as competitive as Namibia (cp recent ranking). Greece is not a poor country but it is unable or unwilling to tax the rich, it has not privatized a lot of state-run companies, it has not really begun to shrink its gigantic but largely incompetent civil service, ...
Italy has not freed its labour market. Its legal system defies description, ... Otherwise they would have
jailed Berlusconi. As it is, this lecherous clown can now plan a comeback and in his media he can blame the crisis on those Germans.
I think you should be more careful about the company you keep.

There is no comeback for the lecherous clown. He may run again, but he was already vastly unpopular in 2008, when he formed a solid majority in parliament (thanks to the vagaries of a law his government authored in 2003) even though only 37% voted for his party and another 5% voted for his coalition partners.
In our country it is very difficult to prosecute those who have the Vatican's protection. And Berlusconi was sponsored from Day 1 by the Curia.

Also, the law in Italy comes down very hard - on those who are not billionaires. It's called Capitalism.

We might be forced to think that "evolution" has not optimized us for hapiness". Rather, it put us on a "hedonic treadmill" (the theory of "hedonic adaptation"), where humans continually adapt to bad and good circunstances and return to relative neutrality. We might believe, with Goethe, that "everything in the world may be endured except continual prosperity".
I think it is time to start asking some questions, and to recognize some mistakes.
Have Countries like Greece, Ireland, Spain, Italy, Portugal exceed their Deficits? Yes.
Were those Countries the First (and the only ones for that matter) to "produce" those "negative numbers"? No.
Are those Countries responsible for thoses numbers? Yes.
Are they fully and entirely responsible for those numbers? No. There were (and still are) external reasons (the absence of decisions in the Eurozone, the unreasonable pressure of the markets) that had (and still have) colossal impact on those numbers.
Perhaps we should take a clue from "Robert Fisher", athor of the method of principled negotation (negotiation on merits), developed at the Harvard Negotation Project, and create our own best alternative to a negotation agreement (batna). What is the best alternative for Europe? Letting aside "blaming issues", no keeping score of who did what to whom. What is the best way? I believe the end of the European Union, the end of the Euro is not a solution. I still think, despite the crisis, that the European Union is the best politial idea (concept) that ever existed. Don´t throw out the baby with the bath water (" Das Kind mit dem Bade ausschütten.")

The end of the EuroZone, first, the end of the European Union, second. The European Union legally admitted (comprised) three pillars:

First Pillar: The European Communities pillar handled economic, social and environmental policies. It was the only pillar with a legal personality, consisting of the European Community (EC), the European Coal and Steel Community (ECSC, until its expiry in 2002), and the European Atomic Energy Community (EURATOM).

Second Pillar: The Common Foreign and Security Policy (CFSP) pillar took care of foreign policy and military matters.

Third Pillar: Police and Judicial Co-operation in Criminal Matters (PJCC) brought together co-operation in the fight against crime. This pillar was originally named Justice and Home Affairs (JHA).

None of those three Pillars stand today in the EU. There is no
Economic Union (Monetary Union); no Social Union and no Political Union.

Your question is very important, it put things into perspective.
Again, the question is very simple: More Europe (United States of Europe - project bonds) or No Europe at all ( no project bonds -The End of The Euro and of the European Union - The first page of the Economist May 24 2012 says it all).

Is the Economist really so concerned about the deveopment in Southern Europe or could it be that its preference to save all the banks is much more in the interest of the City of London?
I find it quite strange that the City of London, the core of the European financial system, is never mentioned in all these Charlemagne articles about the debt crises.

"I find it quite strange that the City of London, the core of the European financial system, is never mentioned in all these Charlemagne articles about the debt crises."

This is not strange but just consequent. Charlemagne permanently points at the Germans to pay for each and everything, in order to distract from the big part The City played (together with Wall Street) in the destruction of the world as we knew it, and from the huge costs this caused and causes to societies, taxpayers, nations.

I understand the data you cite is only a one-month snapshot for July of this year. However, it is a very welcome development.

For an economy with tightening access to foreign credit such as Italy, sharply dropping imports are an entirely normal turn of events. The same is happening in Greece, Portugal and Spain.

Italy has run up around 300 bn in unpaid bills (literally) to its euro zone partners, and owes at least 3/4 of that sum to Germany alone (via the ECB target 2 mechanism). I am sure the Germans are happy when that staggering amount has just been reduced by ... ehm ... what again? 10 million euro?

Well, I don't want to be sarcastic here.

Let's look on the bright side: spending (also on exports), prices and wages in Italy will have to go down by up to 30% from their current levels if the country is to economically survive inside euro zone, and this is a good start. Congrats.

Your knowledge of Italian wages is WAY OFF BASE. Please leave it alone. No, high wages are not at all the problem here - and Marchionne, the most hated industrialist in all of Italy (including by other industrialists at this point) has actually offered to INCREASE wages slightly to FIAT workers. We have the second-lowest wages in western Europe after Portugal. Our wages are now more or less the same as in the Czech Republic - with a much more expensive cost of living.
You are right about sharply dropping imports. Although that does not explain why German imports dropped by 11% while all imports dropped by only 4%.
Also, your are right about July being only a one-month snapshot so far - but it does seem to be a trend that started about 18 months ago - and is gathering force of late.
Also, Italy is less dependent on foreign credit that you might think - don't forget our sovereign debt is close to 70% financed domestically. Private debt is very, very low here, BTW - such that our total debt ratio is lower than that of the Netherlands, for example. I have read that our total public and private foreign credit needs, including rollovers (mostly) are about €400 billion per year. As our economy de-leverages and savings increase (not for most families, but yes, aggregate private savings are still increasing, as are bank deposits from Italian savers).
Finally, your usual Target 2 bullshit:
These are NOT unpaid bills. They are an accounting convention. REAL money has flowed from Italy to Germany. Germans are the ones profiting from Italian financing in this case - not Italy profiting from "German" "loans". Your words add insult to injury. There is a reason why Italians are the number one holders of German bunds, eh?
WE WANT OUR MONEY BACK FROM YOU!

Oh, btw: credit-induced recession does not explain why our exports have risen 4% in the most difficult international market ever seen in peacetime.

And, our economy never was credit-based. Our banks never allowed it, being amongst the most conservative in Europe. The recession is not credit-induced - it is induced by the liquidity crisis, and this is Germany's fault (or at least the Bundesbank's).

Like all independent professionals in Italy, I am having difficulty finding money to put petrol in the car - and I am owed €8000 for work already delivered. Other friends are owed €20,000, €50,000 and even €85,000. Nobody who is not a direct employee is being paid on time here. Payment comes after an average 6 months, and frequently exceeds one year. These timeframes start with the federal government and FIAT our largest corporation (How do you think they have amassed €27 billion in cash reserves? Only VW in the auto world has greater reserves) and continues down to all levels of the Italian economy.
In that context, of course everybody is putting off buying new cars. Most Italians do not live around snow and ice - and with good care, our cars can last for decades. Throw in the high price of petrol (last week I paid 1.80 for a litre of good wine from local farmers and 1.82 for a litre of petrol - and emitted a dozen colourful blasphemies in Italian...) and my fellow citizens are now down to driving an average 8000 km or less per year.

We are some of the world's richest citizens, and this ridiculous, German-inspired Liquidity Crisis in the midst of the American-inspired Financial Depression has driven us into abandoning the consumer economy.

Auto sales in the peninsula have now hit levels not seen since the 1950's - yet unemployment is below the EU average, homelessness and hunger are almost non-existent, the health system creaks along adequately in most parts of the country, covering all citizens for little or no payment, the nation still managed to save 10% of income last year, adding €150 billion to aggregate savings and no major banks or corporations have gone into bankruptcy.

Our domestic economy is dead in the water for no good or legitimate reason, and hatred of Germany is rising for exactly this reason. Germans are the ones who think printing money is the midst of a Depression is a bad idea - thus leaving most of Europe with a severe liquidity crisis.

The Italian economy is forever in the doldrums because your competitiveness is low. And your competitveness is low because you produce at too high costs, are too slow and inflexible in adapting to globalization (unlike your more agile neighbors in Northern Europe), and because your public adminstration is not only grossly inefficient by OECD standards, but also Western Europe's second most corrupt after Greece's.

1) Italians are unrivaled champions in distrusting their own banking system and state. The Spanish (pop. 47 million, and less afluent than Italy) have 1.5 trillion in deposits at domestic banks. Italians (pop. 60 million, and more affluent) only 1.4 trillion.

2) It's not just Italian capital leaving Italy, but also e.g. German investment: Before the euro was introduced, Germans invested 2/3 of their savings at home, and 1/3 abroad, mostly in the EU. After the euro's introduction, 2/3 were invested abroad, and 1/3 at home, which cost Germans about 1% of growth annually. Now the figures are back to the old normal. So what are you complaining about?

Bottom line: Capital is fleeting. Improve investment conditions and trust in your banking system, and you'll attract more capital. If you don't, money will remain tight. It's that simple.

There is an unpaid bill to the order of 300-billion euro owed by the Italian central bank to the four central banks of Germany/The Netherlands/Luxembourg/Finland (in that order), and that's not merely an accounting position, but outstanding debt which in the event of a break-up to the euro zone would be added to Italy's public debt and send your country straight into bankruptcy.

You really should read up on the plentifold consequences of your country's incompetitiveness - it's quite fascinating. "Il sole 24 ore" seems to be on the issue - I suggest you take a peep every now and then.

Apparently you are confusing Italy with other southern European countries.

We have been a net contributor to the EU since the late 80's. Our per capita net contributions TODAY are 10% higher than the Dutch and only 8% lower than Germany.
Also, Italian investors are the largest holders of German bunds - over €200 billion worth.
Be careful, we own you...

Apparently you are confusing Italy with other southern European countries.

We have been a net contributor to the EU since the late 80's. Our per capita net contributions TODAY are 10% higher than the Dutch and only 8% lower than Germany.
Also, Italian investors are the largest holders of German bunds - over €200 billion worth.
Be careful, we own you...

"The Italian economy is forever in the doldrums because your competitiveness is low. And your competitveness is low because you produce at too high costs, are too slow and inflexible in adapting to globalization"

Yes, our high costs and slow, inflexible adaptation to globalisation is why we are the fifth largest exporter to Germany - and why we have now a trade surplus with Germany despite purchasing 350,000 German-made cars per year. (Germany purchases only 35,000 Italian-made cars).
Kinda tells you that autos is not the strongest sector of Italian exports, eh?

Tell me Josh: what other country has achieved a trade surplus with German of late? And don't dodge the question with your racist insults...

1) Don't insult our bankers with your mud. This is psychological projection on your part. Spain, like the Netherlands and the UK, is demonstrably over-banked. Italy is not and never has been. Note the distinct lack of bank bailouts in the peninsula.
2) No, Italian capital is not leaving the peninsula. Some foreign capital is. Bank deposits from Italian individuals and companies have increased slightly over the last 12 months.
3) There is no problem with trust in our banking system.
There is a problem with foreign investment in Italy - but really, I was shocked to learn from the Finnish finance minister that there has been NO FDI in Finland from 2008-present. So this is a cheap and misleading shot on your part. There has been a collapse of international trust throughout the western financial world. This is America and Germany's fault, not Italy's.
4) Really, shut up. No, I mean it, shut up.
The capital Germany has attracted over the last 3-4 years is ours. Not France's, not the UK's, not Japan's and not even America's. It is Italian capital.
This fact is the best reason for us to exit the Euro.
We are buying up Germany Josh. Get used to it. You will soon have an Italian boss.

2) This is not an "unpaid bill". Where are the services rendered? This is a question of temporary capital flows. Real Italian money has gone to Germany: we want our money back. You are quite wrong about a breakup of the Euro-zone hurting Italy. We are the ones paying most to hold the Euro together. Independent studies (try Bank of America) insist Italy is the country that would benefit most from leaving the Euro.
Would you like to see what would happen to German manufacturers with Italy outside the Euro? Enjoy the rising tide of unemployment - it's about time it got to Germany.

Other than that, I suggest you familiarize yourself with the ECB's target 2 mechanism. It's about time.

A target 2 deficit represents unpaid bills: bills not paid by the Italian central bank to e.g. the Bundesbank.

If you buy a chain saw produced in Germany, you pay the vendor, and the vendor pays - no, not the German producer but the Italian central bank, which transfers the sum to the Bundesbank, which pays it out to the German producer.

For bills worth 300 billion euro, the Italian central bank has been unable to transfer the funds to other central banks of the euro system.

Why? Because it is already short on capital needed for the capitalization of its banks. And why is that so? Because capital has been leaving Italy en masse.

There has been virtually no money going from the Bank of Italy (and only 6 billion over four years from the Treasury) to capitalise our banks - nor has there been any need to.

And you seem to forget the monies the German banking system has borrowed from the Federal Reserve (Italian banks did not).

The Target 2 Mechanism represents a temporary clearing mechanism - thrown into imbalance by the large amounts of capital flowing from Italy to Germany. Most probably, the largest amounts of these funds derive from German companies withdrawing cash from their Italian subsidiaries.
BTW, most Italian businessmen I know who have been selling off their companies are finding French purchasers. For example, Louis Vuitton is making significant purchases here. The French are still investing massively in the peninsula.

And no, capital has not been leaving Italy en masse. Over the last 12 months, deposits owned by foreigners have declined from 18% of the total to 13% of the total. Italian-owned deposits have increased.

BTW, notice that Germany's trade surplus with Italy has evaporated exactly as Germany is exiting nuclear energy - the cost of your products is rising as energy becomes more expensive in Germany. We already went through this in Italy in the 90's.

Iu-huuuu! (Or, in English - Yoo-hoo!)
I had missed the news a few days ago - definitely worthy of being highlighted:
The Italian trade SURPLUS shot upward in July, to €4.5 billion, as exports rose 4% and imports declined 4%. This means our surplus for the year will likely be even stronger than expected - possibly over 1% of gdp. (Net of petroleum imports, the surplus was over 10 billion). But that is not the best news...
ITALY ACHIEVED A TRADE SURPLUS WITH GERMANY FOR THE FIRST TIME IN DECADES!!! (OK - only € 19 milllion - but still...) This as German exports to Italy dropped by 11% over July 2011.
Please excuse my joy - we need the good news. Besides, how many other countries in the world can claim a trade surplus with Germany? Not possessing a drop of petroleum within their national territory?
And, this was achieved, for the first time in a century, without a currency devaluation.
Well, our German "friends and allies"... you wanted this. That was the message you sent out. No currency devaluation, no trade deficits, no printing of money in the midst of a Depression.
Enjoy the unemployment (I hear GM/Opel will be the first to announce plant closures in Germany).